The disruption of venture capital

One of the reasons I moved to Forward was to be in the vanguard of change for early stage company finance. Union Square Ventures partner Albert Wenger wrote a post yesterday about the disruption of venture capital which lists the changes afoot:

  1. Information about VCs on the internet. In the mid-1990s VCs began to have websites, but there were no good resources for entrepreneurs to find out about the venture capital process and learn about individual firms or partners. Today there is much more transparency. Many funds publish their investment theses (ours will come soon) and we have endless VC and entrepreneur blogs as well as resources like TheFunded.
  2. Online access to VCs – over the last 5 years or so it has become possible to build relationships with VCs over the internet. Before that offline networking was the only way.
  3. Angel investing has grown – wealth creation in the internet bubble massively increased the number of angel investors, particularly outside Silicon Valley.
  4. Startup costs have fallen – open source software and cloud computing have driven startup costs down by a factor of 10
  5. Crowdfunding is now realAngel List is the big player here, but other platforms including Seedrs in the UK are also getting traction (my old firm DFJ has an investment in Seedrs)
  6. Data driven investing – there is an emerging trend for investors to make heavy use of data. VCs are developing in-house tracking solutions and we now have third party services like Mattermark.

At Forward we can benefit from all of these trends. Most obviously we are an early stage investor and love working with low cost startups at their early stages, but we are also very visible online and transparent, and work a lot with angels. Going forward one of the interesting opportunities in front of us is finding a way for our startups to systematically leverage crowdfunding.